Monthly Archives: October 2009

Head For Developing Markets

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Hong Kong Trade Development Council

Hong Kong Trade Development Council

Exporters everywhere should take a look at a new report issued by the Hong Kong Trade Development Council, entitled “Impact of the Current Global Financial Crisis on World Trade Structure”.  Sounds like a snoozer, but it isn’t.

The report is intended to advise small Hong Kong exporters on what to do to recover from the recession, but the advice serves well for exporters anywhere.  The major conclusion is that you should keep your developed country markets if you can, but that the real growth to come is in developing countries.  For Hong Kong, of course, the prime developing country is China.  While the coastal areas of China are facing the drag of slow sales to their existing markets, inland areas of China are likely to see purchasing growth as a result of stimulus packages being showered from Beijing.  That’s not to say every exporter should rush headlong into China!  I’ll have a post up in the next few days about the difficulties HKTDC sees with selling in China.

After China, HKTDC advises Hong Kong’s exporters to look at emerging Asia.  Vietnam is highlighted as a likely fast-grower, followed by Malaysia, Indonesia and India.  HKTDC likes central and eastern Europe after mid-2010, but warns about Hungary.  Russia and the Middle East are attractive, with purchasing likely to increase as oil prices rise.  Mexico, Brazil and most of Latin America will tend to grow as the U.S. recovery gets into gear, but HKTDC cautions that Argentina may lag.

Is That A Real iPhone In Your Pocket?

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Perhaps not.  At least in Shanghai.

Is it real? No.

Is it real? No.

The South China Morning Post reports that Apple’s looming launch of the iPhone in China may be a disappointment.  Reporters explored a consumer electronics street market in Shanghai and found thousands of iPhones for sale.  Some of them were real.  The real iPhones had been smuggled in, but were being out-sold by “high-end” counterfeit iPhones, many of which come installed with the same software as the original.  The article reports speculation that there are already 2 million iPhones (real or otherwise) in use in China and that much of the market for the expensive gizmo has already been filled.  And, since the announced prices for “official” iPhones are higher than real ones smuggled in, sales prospects for the official iPhone launch are dimming.

There are several lessons here.  IPO enforcement is still too lax in China.  Apple needs a more aggressive pricing policy.  And trying to restrict iPhone usage to designated carriers is a futile strategy that has already backfired in China.

Exporting Education

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Sun Yat-Sen, One of Hawaii's Foreign Students

Sun Yat-Sen: Foreign Student in Hawaii

Not many of us think of education as an export industry, but we should.  Every time a foreign student signs up at one of our local schools, no matter what the level, that is a new export.  The balance of payments impact of foreign students counts just as much as if we had exported cement.  The impact in ideas and goodwill can last a whole lot longer.  And students are, for the most part, environmentally friendly.

To put things in perspective, Hawaii is not a major exporter.  The U.S. Bureau of the Census tells us that Hawaii exported about $960 million worth of hard goods in 2008.  That number is high because the data includes products that leave the United States through Hawaii, not just what is made here and exported.  If you back out products that are not really of local origin, Hawaii’s physical exports were probably a little more than $500 million last year.

Services are Hawaii’s real export strength.  Every foreign tourist on our beaches is an export success, and our architects and engineers are designing and building projects worldwide.  None of that shows up in the official export stats, but they are exports nonetheless.  Education exports have been under the radar, but that may change due to a new report issued by the State of Hawaii and the local chapter of the Association of International Educators (NAFSA).  I haven’t yet seen the full report, but the press release is here.

The bottom line is that more than 13,000 international students and their families spent $160 million in Hawaii during the latest academic year.  The top countries of origin (meaning our top markets) were, in order: Japan, South Korea, Switzerland, Taiwan and China.  Switzerland!  Somebody must have done some good marketing.

Three years back for my old radio show, working with NAFSA data, I came up with a back-of-the-envelope estimate that foreign students in Hawaii brought at least $50 million annually to our local economy.  I am sure the new report did it in more detail, but I suspect we are seeing an awesome growth rate.  At minimum, the new report demonstrates that Hawaii has a major export industry it did not even know it had!  Perhaps we should think about how to help it along.